AeroVironment, Inc. (AVAV)

When AVAV announced its big earnings beat 9/6/2018 of 0.85 eps, it guided eps for the full year of 1.1-1.4. The stock went as high as $121. In December it beat and raised full year eps guidance 1.3-1.5. The stock dropped to as low as $65. Now they beat and raise again to 1.6-1.8, with a negative reaction. If the stock was going to fall, it should have done so based on the guidance in September. (It did, but not until the whole market corrected.). Since then, there have been only positive surprises. The business, and therefore the stock, is worth more after the earnings beat and raise than before. It is oversold and should and will go up.

For a small company like this that may finish orders at various times in the year, you can’t just look at one giant quarter (fiscal 2019 Q1, which included 0.26 eps of a litigation settlement) and now say the company is shrinking because subsequent quarters haven’t kept up. Except for a couple of outlier quarters there has been steady, sequential earnings and revenue growth. They are guiding further revenue growth. This is a premier company, a market leader in an industry that is growing, with the US expected to increase spending on drones by 15%/yr the next 5 years. As far as I’m concerned, this is a great price for a great company.

On April 30, 2020, AeroVironment, Inc. (the “Company”) entered into an amendment to the Design and Development Agreement (the “Amendment”) with HAPSMobile, Inc. Under the Amendment, the maximum net value of the Design and Development Agreement increased by $17,531,644 due to a mutually agreed upon decision for a flight test site relocation, for a total maximum net value of $157,791,267. Payments regarding the relocation effort will be paid upon the completion of certain milestones and a mutually agreed upon payment schedule. The total maximum net value excludes approximately $6.0 million of consideration paid to the Company by SoftBank Corp. under preliminary design agreements related to the program.